IMF Asia View for 2026: Ideas Later.

 

IMF upgrades 2026 global growth outlook as AI boom in Asia continues

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Article:WASHINGTON (Kyodo) -- The International Monetary Fund on Monday raised its 2026 global growth forecast to 3.1 percent from 3.0 percent projected in July as robust artificial intelligence-related exports in parts of Asia continued, cushioning the economic impact of the war in Iran.

"Two major transformative forces -- geopolitics and technology -- are reshaping the global economy, with their short-term impact gradually coming into view and their longer-term impact still largely unknown," the IMF said in its latest World Economic Outlook report.

The key quarterly report said exports from South Korea and Taiwan, which lead the world in the production of advanced semiconductors, are likely to generate positive spillover effects for other manufacturing-oriented countries in Asia and a handful of commodity exporters.

The IMF noted that capital goods associated with AI are largely sourced from Asian countries, such as Japan, Malaysia, Singapore and Thailand, in addition to South Korea and Taiwan.

For 2027, however, the IMF left its growth outlook unchanged at 3.4 percent, with risks "skewed to the downside."

"A prolonged stalemate or further escalation in the Middle East could keep energy and food prices elevated and volatile, revive inflationary pressures, worsen fiscal and external balances, and weigh on growth," said the report released during the IMF and World Bank's annual meetings in Bangkok.

Mainly because of war-induced higher prices, the IMF raised its 2027 global inflation forecast by 0.2 percentage point to 4.1 percent. Its 4.7 percent projection for this year was unchanged.

Among major economies, its growth projections for the United States, China and Japan are the same or almost unchanged. But its 2026 forecast for Germany was revised upward to 1.3 percent from 0.7 percent, buoyed by a pickup in manufacturing activity.

In the euro area, growth is projected at 1.1 percent this year, up 0.2 point from three months earlier, and 1.2 percent next year, unchanged from the previous report.

The U.S. economy is expected to expand 2.3 percent in 2026 and in 2027, the former unchanged from three months earlier and the latter up 0.1 point, with the IMF citing robust private consumption and technology-related investment.

China's growth is projected at 4.5 percent and 4.0 percent in the corresponding years, both figures down 0.1 point.

In 2026, Japan's economy is likely to grow 0.7 percent, an upward revision of 0.1 point, as the adverse effects of higher energy prices have been mitigated by fiscal support measures. The forecast for the following year remained unchanged at 0.7 percent.

Article source:   https://mainichi.jp/english/articles/20261013/p2g/00m/0bu/038000c